Obamacare Reset: A Free Market Vision for Health Care Reform

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“We are now three years into health care ‘reform’ and it is crystal clear that what we have is no reform at all,” says Dr. Nick Pandelidis in this week’s Acton Commentary. “As we are seeing, the Patient Protection and Affordable Care Act, as is typical of so many government program names, will result in just the opposite outcome. PPACA is unaffordable, it will harm patients, and it will do incalculable damage to human dignity.” The full text of his essay follows. Subscribe to the free, weekly Acton News & Commentary and other publications here.

Obamacare Reset: A Free Market Vision for Health Care Reform

We are now three years into health care “reform” and it is crystal clear that what we have is no reform at all. As we are seeing, the Patient Protection and Affordable Care Act, as is typical of so many government program names, will result in just the opposite outcome. PPACA is unaffordable, it will harm patients, and it will do incalculable damage to human dignity.

It is helpful to remind ourselves why there has been such a broad, bipartisan push for health care reform in recent years. Largely that consensus was built on two factors: Access and uncontrolled health care cost growth. Of the two, access for the uninsured and those with pre-existing conditions has been the more emotionally charged, politicized, and demagogued issue.

Access for the uninsured and those with pre-existing conditions must be addressed but the magnitude of the problem is smaller and more manageable than the political rhetoric would lead us to believe. It is also subordinate to the primary issue of unaffordable healthcare and health insurance. Lowering the cost of health care and health insurance would go a long way to lowering the numbers of the uninsured.

Despite all the rhetoric and acrimony of the health care debate, there is still much confusion about the nature of the two main opposing visions for reform: One is based in central government control and the other on individual freedom.

President Obama’s health care “reform” is built on bureaucratic medical decision making and massive deficit spending. In stark contrast, a market-based health care reform approach would be based on individual freedom and personal responsibility. This market-based, or free market approach, would be financially viable, would lower costs, and would improve quality of and access to health care. It’s not too late to “reset” reform and craft a real, workable approach to solving healthcare access and funding problems.

Reform Must Go Forward

What are the principles underlying this free market health care reform? First, the status quo is not acceptable. Health care cost growth is unsustainable and threatens the financial well-being of individuals and families, small and large businesses and our government at all levels. Further, the poor and many with pre-existing conditions have inadequate access to health care insurance. But it must be recognized that lowering costs and a strong economy would go a long way toward improving access.

Second, there is no such thing as free health care. Everything has a cost. Like all resources, health care is limited. The real question is how to efficiently allocate limited health care resources. Economic experience has repeatedly demonstrated that limited resource allocation in a context of economic freedom, based in individual choice and personal responsibility, results in more of a particular resource for more people. That same experience has demonstrated that centralized government planning and decision making is inefficient and results in less output of a particular resource.

Finally, and perhaps most importantly, we have an obligation informed by justice and our faith traditions to provide health care for those who truly cannot afford to pay for these services. Our daily witness to our faith is largely lived out in koinonia, or community, with fellow human beings in whom the faithful Christian perceives the person of Jesus Christ.

Inherent in this market-based approach are three objectives. The first is to assure that the program results in its stated outcome – accessible high quality health care for the recipients. The second is to assure that the money devoted to the program is not spent wastefully. Medicare mostly meets the first criterion but not the second. Medicaid fails to meet either criterion. Third, we must ensure that the program is affordable. If the program is not financially sustainable, the program’s proclaimed benefit is an empty promise.

Getting Specific

The components of the free market vision of health care reform would look like this:

Coverage for those with pre-existing conditions: The great majority of persons with pre-existing conditions have adequate access to affordable health insurance because most have employer provided insurance. Employer-based insurance already has safeguards preventing denial of coverage or excessive premiums for those with pre-existing conditions who have maintained continuous coverage as they move from job to job. Free market reform will no longer allow insurance companies to deny coverage to those persons who must get coverage in the individual market. This reform will also establish appropriately funded high risk pools for those who cannot afford the higher premium costs for pre-existing expensive medical conditions.

Coverage for the poor: Free market reform will provide all individuals and families with a refundable tax credit to buy health insurance. With this tax credit, the poor can buy quality health insurance, and will no longer be relegated to a second-rate Medicaid system.

Individual ownership of health insurance: Free market reform will make health care insurance refundable tax credits available to all individuals and families. Now all persons who buy insurance will have the same tax benefit as those who currently have employer-provided insurance. Further, they will no longer lose their coverage if they change or lose their job. Perhaps most importantly, this health care tax reform will greatly encourage insurance market competition.

Individuals in charge of their own health care, and incentives for cost-effective health care spending: Free market reform, by promoting health care savings accounts in conjunction with catastrophic coverage, will put the money spent on health care in the hands of the consumer who actually uses the health care. This financial control restores the individual’s freedom to make their own health care decisions. Third party payers will no longer infringe on patient-physician decision making. Direct control of health care spending will also encourage individuals to utilize health care services and spend money more wisely than if someone else were paying the bills.

Increased competition and choice in the insurance market: Freer markets and increased competition will result in lower costs, more choices, and improved quality and service for the entire health insurance market. In addition to the previously discussed federal tax policy reforms and promotion of transparency, free market reform will decrease the number of mandated services so individuals can get the coverages they need and can afford. Finally, this reform will also open insurance sales across state lines.

Personal responsibility in health lifestyles: This reform will allow the young, healthy individuals and families, and those who make healthy life style choices to buy lower cost insurance that reflects their health status and lifestyle choices. Conversely, individuals who make unhealthy lifestyle choices will pay more for their health care coverage – just as drivers who have repeated accidents pay more for auto insurance than safe drivers.

Keeping the health care security promise made to our seniors: The Medicare program is projected to be insolvent within 12 years. The current defined health care benefit effectively creates unlimited demand and promotes excessive spending. Free market reform will put Medicare on sustainable financial footing by gradually transforming it from an unsustainable defined benefit program to a defined contribution plan and thereby keep the health care promise made to our seniors. Individuals of or near Medicare age would see no change in their coverage while those who are 10 years or more from Medicare enrollment would participate in the new fiscally solvent Medicare program.

Health care reform founded in the principles of individual freedom and personal responsibility will provide effective and viable remedies for unsustainable health care costs and for inadequate access for the poor and for those with pre-existing conditions. President Obama’s health care law puts our medical care into the hands of Washington bureaucrats. It’s funded by typical Washington accounting tricks and, ultimately, massive deficit entitlement spending. Free market health care reform will lower health care costs for individuals, families, small and large businesses, and government at all levels. True reform will strengthen the economy, increase employment, lower our national debt and unfunded liabilities, and restore our children’s opportunity to live in freedom and prosperity.

Dr. Nick Pandelidis practices medicine in York, Pa. He serves on the Board of Trustees of St. Vladimir’s Orthodox Theological Seminary in Crestwood, N.Y.

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).